The risk is that the customer is forgotten “- Swedish Dagbladet

The risk is that the customer is forgotten "- Swedish Dagbladet

Ica’s foray into Norway has been a long suffering, with losses of about 3 billion over five years. The stock market appreciates that ICA can emerge from the Norwegian grip and recognize a capital gain of SEK 1 billion on the sale itself is thus not surprising. But the sale price may Ica hardly to Swedes showed no leading skills in their attempt to conquer the Norwegian market.

If the ICA is used to dictate the game terms it’s hard to act like ones. In addition, ICA has encountered political resistance and the situation has certainly been tough. With galloping losses and a strong opinion from both ICA retailers and shareholders to make Norway became difficult to stay on, even though it would hardly have been something wrong with the original idea from the food retailer to expand into the affluent Norway.

The reason that Ica can get so well paid that Norwegian Coop in one blow can increase its market share from about 23 percent to 34 percent. Coop will thus almost caught up with one of Norway group, which has a market share of 39 percent. Coop is thus both a great competitor, and getting yourself further economies of scale.

The deal has also similarities with two other large stores listed Swedish consumer companies have done in recent months. Tele2 also grew tired of its Norwegian operations, which barely went around and sold to TeliaSonera. While Ica prevented making a purchasing alliance with its biggest competitor, became Tele2 in December last year without new spectrum when the Norwegian authorities auctioned off mobile licenses. The future became even bleaker for an already weak player.

TeliaSonera pays still 5.1 billion, giving Tele2 a gain of 2 billion. The declaration called major synergies and, not least, a market that is increasing 23-40 percent. Thus buttons TeliaSonera in on the old merger candidate Telenor.

Ica store also has some similarities with Electrolux purchase of General Electric appliances for 23 billion. It can be considered worthwhile to pay well to get up market share, create synergies and keep competing buyers away. For companies that sit with unprofitable businesses where there are buyers, you can get paid well. Then it remains to be seen whether the buyer manages to retain its market share.

The risk is that too much gunpowder spent on house work while the customers are forgotten. The argument that business is best solution for our customers, both in the ICA store and Tele2 / TeliaSonera, has a lot to prove. For customers it is rarely good with oligopoly. The two biggest players are now very strong positions, both in food production and in telecom. The risk is that customers are not allowed to take part of the economies of scale and instead suffer declining competition.